Bob Diamond testifies to British parliament

July 4, 2012, 8:32 AM ET

Reuters

Bob Diamond.

The former chief executive of British bank Barclays, who stepped down this week over an interest-rate-fixing scandal, gave testimony to a parliamentary Treasury select committee Wednesday. MarketWatch live-blogged the event, which focused on Diamond’s knowledge of what transpired during the bank’s Libor submissions in and around the 2008 financial crisis.

Ahead of testimony from Bob Diamond in about 20 minutes, we have our first piece of Libor-related news. Bank of England Deputy Governor Paul Tucker is requesting to also appear before a Treasury committee “as soon as possible” in order to clarify the central bank’s position, including the telephone conversation with [former Barclays chief executive] Diamond in October 2009.

Ahead of testimony from Bob Diamond in about 20 minutes, we have our first piece of Libor-related news. Bank of England Deputy Governor Paul Tucker is requesting to also appear before a Treasury committee “as soon as possible” in order to clarify the central bank’s position, including the telephone conversation with [former Barclays chief executive] Diamond in October 2009.

Diamond says he stepped down because he “loves Barclays” and that he feared the intense focus on his leadership could harm the company. He says Barclays, one of several banks to be probed in the international rate-fixing investigation, is feeling extraordinary heat since it was the first institution to settle.

We are drilling down now into the well-documented phone call with Paul Tucker in Oct. 2008. Diamond says Tucker’s alleged warning that U.K. government officials perceived Barclays’ Libor borrowing rates as high prompted fears the government could feel it needed to nationalize Barclays.

Jerry del Missier, Barclays’s chief operating officer until yesterday, is perhaps the most culpable executive at Barclays. Whereas Diamond, in that phone conversation in 2008, did not feel that Tucker was suggesting that Barclays should fiddle with its Libor submissions, Missier did.

An interesting tweet from the BBC’s political correspondent: @BBCNormanS Despite prompting by Tory Michael Fallon, Diamond refuses to point finger of blame for Libor scandal at Labour ministers #diamond

Now an important point: Asked if he [Diamond] is under criminal or civil investigation by the Financial Services Authority in the U.K. or the Securities Exchange Commission, Commodity Trading Commission or Department of Justice in the U.S., Diamond says: not that he is aware of.

More from the Twittersphere, this time from an editor at the Daily Telegraph: @jeremywarner: UK Bizarre that #Diamond didn’t know about low balling until this month when he obviously knew of the investigation and Agius knew 2 years ago.

Diamond tells the committee that he became “physically ill” when he learned that Barclays personnel were lowballing their Libor submissions. He reiterates that the behavior was “reprehensible” and that the actions of a few don’t reflect the culture or the workforce of Barclays.

Andrea Leadsom, a conservative MP, has just stopped poking Diamond in the ribs about whether Barclays traders would have known that submitting false Libor rates would have been illegal. Kind of an obvious point. That’s “compliance,” Diamond replied. She wasn’t really satisfied with that, however.

The committee is hammering Diamond on questions about Barclays’s corporate culture. How was it possible that he and other top executives remained ignorant of the false Libor submissions until an investigation was under way? The “behavior was stopped” is how Diamond deals with that.

Now the B word: bonuses. Sky News is reporting that Barclays directors will ask Diamond to waive around 20 million pounds in bonuses. Diamond says he hasn’t been an “avid reader” of the press for the last week But that it is “certainly a question for the board.”

The political firestorm over the Libor scandal is heating up. In an interview published online Wednesday by the Spectator magazine, British Chancellor of the Exchequer George Osborne says the previous Labour government faces serious questions. In regard to the 2008 conversation between Bank of England Deputy Gov. Paul Tucker and Diamond over concerns among Whitehall officials over Barclays’s high Libor rates, Osborne says: “They were clearly involved and we just haven’t heard the full facts, I don’t think, of who knew what when.”

A point being made now by MP John Thurso that Britain needs two banking cultures. One that is suitable for the High Street, or Main Street, and another that works for the City. Diamond counters that he thinks we have that.

So far Barclays has spent about 100 million British pounds on the Libor investigation, Diamond said earlier today. This is a very long hearing. That may have gotten lost. Approaching the three-hour mark.

What did [BoE Deputy Gov. Paul] Tucker want you to do, the committee asks? “That was the source of confusion within Barclays,” Diamond says. He actually says Michael. Diamond has been calling all the MPs by their first names all day.

No expense was spared, we acted immediately and the response was firm, Diamond says in his closing statement to the committee. He also says it’s difficult for Barclays to be isolated on this and that if there is another situation like this Barclays will be the first to report it.

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